Stelco Reports for Quarter

Stelco Inc. reported net earnings of $19 million for the third quarter compared with a loss of $19 million the same time last year. Included in third quarter 2002 earnings is a net gain of $9 million after-tax  due to the permanent shutdown of the 'D' blast furnace at Hilton Works. This gain comprised an adjustment to the Corporation's provision for future blast furnace relines net of charges associated with this shutdown.

Market demand remained strong in the third quarter. However, shipment volumes were negatively affected by the last-minute settlement of the 4-year labor contract at Hilton Works and a strike at Stelco-McMaster Ltee, which commenced on August 1, 2002. In addition, unplanned outages of 10 days at Hilton Works' hot strip mill and 9 days at Lake Erie Steel's hot strip mill also negatively impacted flat rolled sheet production and shipment volumes. These items that were one-time events, with the exception of the Stelco- McMaster Ltee strike, which is ongoing, are estimated to have adversely affected shipments by 150,000 tons and net earnings by $15 million in the quarter.

Net sales in third quarter 2002 were $705 million compared with $645 million in the same quarter of 2001. Steel shipments during the quarter were 1.101 million tons, a decline of 75,000 tons from the same time last year.

The average revenue per ton in the quarter was $640, $91 per ton higher than third quarter 2001, primarily as a result of higher selling prices as well as a higher value-added mix of sales.

Production of semi-finished steel in third quarter 2002 of 1,239,000 tons was 1 percent lower than third quarter 2001 primarily due to the strike at Stelco- McMaster Ltee partially offset by higher semi-finished steel production at Hilton Works as a result of record 'E' blast furnace output. Increased steelmaking at Lake Erie Steel and at the Hilton Works 'E' blast furnace will compensate for the lost output of the permanent shutdown of 'D' blast furnace at Hilton Works.

Cost per ton increased $41 to $575 in the quarter from $534 in the same quarter of 2001.

Jim Alfano, president and CEO, stated that, "We are pleased that our financial results improved considerably in the third quarter and for the first nine months of 2002 compared with last year, largely as a result of improved steel market conditions. Steel demand remained strong in the third quarter and selling prices continued to increase. Our average revenue per ton in the third quarter of $640 increased $91 from a year ago and $65 from the previous quarter. However, several internal issues prevented us from fully capitalizing on these improved market conditions. Our performance in terms of shipments and earnings was negatively impacted by the last-minute settlement of a new 4-year labour agreement at Hilton Works, the strike at Stelco-McMaster Ltee, and unplanned production outages at the Hilton Works and Lake Erie Steel hot strip mills."